Our long-term goal is to understand how the hematopoietic system is established in the developing embryo. Our studies of in vitro differentiated embryonic stem (ES) cells indicate that the hematopoietic system is established via distinct, sequentially generated Flk-1 and SCL-expressing cells. Flk-I+SCL - cells first arise in developing embryoid bodies (EBs, in vitro differentiated progeny of ES cells). The Scl gene is turned on within Flk-1 + SCL- cells to give rise to Flk-1 + SCL + cells. The hemangioblast cell population, a common progenitor of hematopoietic and endothelial cells, was enriched within these cells. Within Flk-I+SCL + cells, Flk-1 is down regulated to finally generate Flk-I-SCL + hematopoietic progenitors. A serum free in vitro differentiation model of ES cells has identified that bone morphogenetic protein (BMP) -4 is critical in the generation of Flk-1 + and SCL + cells. Many studies implicate the importance of BMP-4 in hematopoietic development. However, none of the studies examined the precise developmental stage in which the BMP-4 functions. Our proposal is to further characterize molecular mechanisms controlling Flk-1 and Scl expression and to determine the precise developmental stage where BMP-4 functions to establish the hematopoietic system. Specific aim I: Further characterize molecular events involved in the generation of Flk-1 + and SCL + cells. Our studies indicate that the activation of both map kinase and Smadl pathways by BMP-4 is critical for the generation of Flk-1 + cells. Furthermore, recent studies suggest that the transcription factor GATA-2 is one component that binds Scl enhancer region. Thus, our aim is to further understand mechanisms controlling Flk-1 and Scl gene expression. Specific aim II. Examine the role of BMP-4 mediated signals in hemangioblast development. Our experiments indicate that BMP-4 is critical for the generation of Flk-1 + cells. What is not clear from our current studies is whether BMP-4 mediated signals are still required after the Flk-I + cell stage in establishing hematopoiesis. Our specific aim is to utilize Flk-l-cre mice and conditional Alk-3 (BMP-4 receptor) knockout mice to determine whether BMP-4 mediated signals are obligatory for the generation of the hemangioblast within the Flk-1 + cells. Specific aim III. Examine the role of BMP-4 mediated signals in hematopoietic and endothelial cell development. Subsequent to hemangioblast development, hematopoietic and endothelial cell lineage commitment commences. Our specific aim is to determine whether BMP-4 mediated signals are required for hematopoietic lineage commitment from the hemangioblast. Scl-cre mice and conditional Alk-3 knockout mice will be utilized.